Several methods are currently available for a purchaser of goods and/or services to pay the provider of the goods and/or services, including, for example, cash or check. A check, as is well known, is a written order to a bank to pay the stated amount of money from a specified account to the payee named on the check. Checks are generally more secure than cash, and as such are used extensively for payment in situations where large amounts of money are being paid or the payment is being sent through the mail. As such, banks must process tens of thousands of checks every month.
The processing and clearing of a check can be generally described as follows. Suppose, for example, a buyer pays a seller for goods with a check drawn on an account the buyer maintains with the buyer's bank. The buyer drafts the check with the seller as the named payee. The seller presents the check to the seller's bank (which may or may not be the same bank as the buyer's bank). The seller's bank, referred to as the “drawer” or “presenting” bank, sends the check to the buyer's bank. When the buyer's bank, also referred to as the “payor” bank receives the check, it determines whether enough funds are available in the buyer's account upon which the check is drawn to cover payment of the check, and either accepts or rejects payment of the check. Alternatively, the seller's bank can send the check to a check clearing house, which then communicates with the buyer's bank (typically electronically) to obtain acceptance or rejection of payment for the check. Once the payor bank accepts payment of the check, payment for the amount of the check is made to the presenting bank through a settlement process.
Banks are generally required to provide their account holders with monthly statements detailing the recent account activity. Some account statements include cancelled checks, i.e., checks that have been presented for payment and for which payment has been made. Thus, all checks presented during a specified time period are retained, either by the bank or the check clearing house. At the end of the time period, the checks are sorted, typically using high-speed sorter equipment, based on the information contained in a line of characters at the bottom of each check. These characters, known as a Magnetic Ink Character Recognition (MICR) code, indicate the bank at which the account is maintained via a routing number, the account number and the check number for each check. If the sorting is being performed by a check clearing house for a plurality of banks, this results in the checks being sorted by institution, i.e., bank. Optionally, the checks could be further sorted by account and check number for each account. As the checks are separated by account number for each bank, separators are typically inserted into the stack of checks to separate the checks for different accounts. The sorted checks are then sent to the respective banks for preparation and mailing of the account statements. Similarly, if a check clearing house only, sorts the checks by institution or is not utilized, then the bank must sort the checks by account number (and possibly by check number for each account) utilizing high speed sorting equipment to read the MICR code on each check. As the checks are separated by account number, separators are typically inserted into the stack of checks to separate the checks for different accounts. The sorted checks are then prepared for mailing with account statements.
Regardless of where or by whom the sorting is performed, once the checks have been sorted by account number, the bank will prepare the account statements. The account statements for these checks are prepared in account order, and the sorted checks are matched with the appropriate account statement for mailing to the account holders. Thus, the mailing for the account statements is produced and ordered based on account number.
There are problems, however, with the processing of the account statements as described above. As noted, the only way the checks can be sorted automatically based on the information printed in the MICR code is by institution and account number. Many banks, however, may have the need or desire to sort the checks based on a different criteria. Using the conventional technology, however, this is not possible without adding additional steps and costs to the processing of the checks. For example, postal authorities, such as the U.S. Postal Service (USPS), provide postage discounts for mail that is presorted based on delivery destination. In the United States, for example, the discounts increase with the granularity to which the mail is sorted along delivery routes. A first level discount is provided if mail is presorted to the first three digits of the destination zip code, a second level discount, greater than the first, is provided if mail is presorted to the first five digits of the destination zip code, and a third level discount, greater than the first two levels, is provided if mail is presorted to a particular mail carrier's delivery route. The amount of postage a financial institution must pay to send the account statements each month can be a considerable expense, especially for large banks that have tens of thousands of customers. Thus, any decrease in the amount of postage required to send the account statements each month could provide a significant savings. As noted above, however, the mailing for the account statements is produced and ordered based on account numbers. To take advantage of the postage discounts, many banks must utilize either a presort service or obtain additional equipment to reorder the mailing, after it has been sorted by account number, based on delivery destination. This reordering step increases the cost (thereby reducing or even negating the postage discount), adds unnecessary delay to the mailing, and adds another process into the mail preparation that can damage the mail pieces, or even worse, result in mail pieces being lost.
Therefore, there exists a need for improved sorting systems capable of ordering cancelled checks for a plurality of accounts in a desired order other than by the account number. For example, there is a need for a system capable of sorting checks in a manner that allows banks to take advantage of postal discounts without adding additional costs or processing in the preparation of the mail pieces that include the account statements and cancelled checks.